VOLUNTARY LICENSES AND ACCESS TO MEDICINES - Médecins Sans Frontières Technical Briefing Document
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VOLUNTARY LICENSES
AND ACCESS TO MEDICINES
Médecins Sans Frontières Technical Briefing Document
October 2020October 2020
Table of Contents
Overview ........................................................................................................................................................ 3
Key issues with voluntary licenses for access to medicines ............................................................................. 4
1. Lack of transparency........................................................................................................................... 4
2. Varying terms through multiple licenses ............................................................................................ 5
3. Overly broad scope of patents............................................................................................................ 5
4. Geographic limitations ....................................................................................................................... 6
5. Differential treatment of age groups, formulations and medical indications ..................................... 9
6. Differential treatment of health care systems .................................................................................. 10
8. Restrictions on the source and production of API............................................................................. 11
9. Anti-diversion requirements............................................................................................................. 12
10. Restrictions on research and clinical studies .................................................................................... 13
11. Grant-back terms .............................................................................................................................. 13
Opportunities for government action ........................................................................................................... 14
Regulating voluntary license practices...................................................................................................... 14
Compulsory licensing ................................................................................................................................ 16
Enabling patent oppositions ..................................................................................................................... 16
Voluntary licensing case studies ................................................................................................................... 17
Medicines ................................................................................................................................................. 17
Country responses .................................................................................................................................... 20
Recommendations ........................................................................................................................................ 24
1. Increase transparency in voluntary licensing agreements ................................................................ 24
2. Consider compulsory licenses and automatic measures to address refusal to license or restrictions
and exclusions in licenses ......................................................................................................................... 24
3. Establish or strengthen law and policy frameworks to regulate voluntary licensing practices ......... 25
4. Encourage and support patent challenges to overcome restrictions in standard voluntary licenses 27
Conclusion .................................................................................................................................................... 27
Glossary ........................................................................................................................................................ 29
Annex 1: Geographic scope of Gilead’s voluntary license for remdesvir ....................................................... 32
Annex 2: Resources on voluntary licenses ..................................................................................................... 34
2October 2020
Overview
Voluntary licensing is becoming a key issue for access to medicines and vaccines broadly as
voluntary licenses have increasingly been used to manage pharmaceutical intellectual property
(IP). In turn, they have had a significant impact on people’s access to lifesaving medicines.
As an international medical humanitarian organisation and purchaser of medicines, Médecins
Sans Frontières (MSF) has experienced first-hand positive and negative impacts of voluntary
licenses on access to the medicines we provide to people in our care. MSF has also witnessed
how voluntary licenses impact the ability of health authorities around the world to procure and
provide essential medicines.
Voluntary licenses are private contractual agreements through which patent-holding
pharmaceutical corporations (licensors) set out the terms under which a generic version of a
patented medicine can enter the market from alternate suppliers (licensees).a While they can
allow generic manufacturers granted a license to supply medicines at lower prices than the
patent-holding pharmaceutical corporation’s own products, they often come with secretive and
restrictive conditions that undermine access to medicines. Through license terms and conditions,
pharmaceutical corporations can set limitations on where and to whom a product can be sold,
control the supply of active pharmaceutical ingredients (API) and impose other restrictions on
licensees.
In the current practice of voluntary licenses, most high- and upper-middle-income countries are
excluded, including many with a high burden of disease related to the treatment in question.b
When countries are excluded from voluntary licenses on lifesaving medicines or vaccines, their
options for securing affordable access are compromised. There is an urgent need to consider
voluntary licenses from a public interest perspective and countries’ responsibility to protect
public health and access to medicines.
To date, countries have not played a central role in regulating voluntary licenses or preventing
abusive practices that can undermine access to medicines. Nevertheless, there are policy and
legal measures governments can and should take to ensure that voluntary licenses do not
undermine access to medicines.
For nearly 15 years, MSF has analysed voluntary licenses for pharmaceutical patents and
advocated for licensing agreements to improve and expand access to affordable medicines for
aFor a detailed explaination of different types of voluntary licenses see glossary.
bSee, for example, Gilead’s 2015 hepatitis C license, which excluded 50 middle-income countries (MICS), accounting for 43% of
the hepatitis C burden among MICs. More details available from: https://msfaccess.org/msf-analysis-gilead-hepatitis-c-license
3October 2020
people in our care and beyond. Though voluntary licenses have been used on different health
technologies, this technical briefing covers licenses related to HIV, hepatitis C, TB and COVID-19
medicines. These voluntary licenses have been signed either bilaterally between companies or
via the Medicines Patent Pool (MPP) – a platform through which patent-holding pharmaceutical
corporations can make licenses available to generic manufacturer sublicensees on a non-
exclusive basis.c
Based on MSF’s experience and analysis of voluntary licenses on key medicines, this briefing
document analyses voluntary licensing key issues, describes opportunities for government
response, presents case studies and recommends steps countries can take to ensure voluntary
licenses best promote access to affordable medicines.
Key issues with voluntary licenses for access to medicines
Certain issues and challenges repeatedly arise in voluntary license practices, especially in
bilaterally negotiated licenses. Key issues regarding voluntary licenses that can impact access to
medicines include: lack of transparency, varying terms across multiple licenses for the same
products, overly broad scope of patents, limitations in geographic coverage, and additional
limitations that undermine the benefits of bringing in additional manufacturers and lower prices
through licensing.
1. Lack of transparency
One major issue with voluntary licenses is that they are often kept secret, even though these
agreements can impact people who are waiting for treatments to become available. Companies
often do not share the agreements, even upon request from procurers or affected civil society,
preventing the public and governments from scrutinizing the terms and conditions.
Pharmaceutical companies – both patent holders and generic manufacturers – often justify this
secrecy by claiming that voluntary licenses contain confidential commercial information or trade
secrets (see, for example, delamanid case study). When trade secrets are broadly defined by
national laws, it allows companies to claim any type of business information as confidential,
including licensing terms and conditions.
Lack of transparency is an even greater concern in voluntary licenses between pharmaceutical
companies and publicly funded institutions. In Brazil, for example, the government’s industrial
policy fostered voluntary licenses on pharmaceuticals and biologicals for public sector
cThe Medicines Patent Pool (MPP) was established in 2010 with a mandate to license HIV treatments. Their mandate has since
expanded to include treatments for hepatits C, tuberculosis and ultimately all WHO Essential Medicines List medicines.
4October 2020
manufacturers (see Brazil case study). Yet access to information requests made to public
institutions have not received adequate responses. Between 2012 and 2014, the Working Group
on Intellectual Property (GTPI), a coalition of Brazilian civil society organizations working on
access to medicines, filed 32 access to information requests with the Ministry of Health regarding
voluntary licenses. Only 5% got a complete response and in 75% of the cases, the information
requested (terms and conditions) was denied and termed as classified information for the sake
of national security.1
Claiming licensing terms as trade secrets or classified security information is problematic.
However, in many countries, current legal mechanisms to ensure transparency of licenses are
weak or insufficient (see, for example, India case study). In contrast, all license agreements signed
by the MPP are published in full text. Despite industry claims, publication of the terms of MPP
licenses has caused no competitive or commercial harm.
2. Varying terms through multiple licenses
Another issue that can impact access to medicines is when voluntary license terms vary on a given
medicine, either because companies negotiate multiple agreements or because they amend
existing licenses, often without publishing the amendments.
Patent holding companies often prefer to first sign secret bilateral voluntary licenses with generic
manufacturers as it is easier to dictate terms and geographical scope in bilateral deals. They may
subsequently enter into voluntary licensing agreements with the MPP on the same product but
may offer different terms and geographic coverage compared to the confidential license signed
bilaterally. The co-existence of different types of agreements on the same products, with some
agreements kept secret, make it difficult to identify the actual access options for a given country
(see, for example, atazanavir case study). It can also leave some manufacturers locked into less
favourable agreements, even when more favourable terms exist.
3. Overly broad scope of patents
Some voluntary licenses may define patents too broadly, including pending applications, appeals
to rejected patent applications, and possible future patent applications related to the concerned
medicines. This approach may be presented as giving more guarantees to the licensee generic
producers that all of the technologies related to the concerned medicines are covered by the
license agreement. Yet, including pending applications and potential future applications in a
broad definition of enforceable patents in the license also creates problems.
For instance under the first bilateral voluntary license on the HIV medicine tenofovir-disoproxil-
fumarate between Indian companies and Gilead in 2006, the definition referred to Gilead’s
5October 2020
“patents” without distinguishing between granted patents and pending patent applications. 2,3 In
2011, Gilead’s licences on tenofovir-disoproxil-fumarate with the MPP required sublicensees to
comply with the licence until all possible patent disputes have been settled. According to the
agreement, a licensee will still have to pay royalties to Gilead and will still be forbidden from
selling the medicine in excluded countries until all patents and patent applications have been
held invalid and no further appeals are possible.4
Bilateral voluntary licenses signed by Gilead with Indian generic manufacturers in 2015 on the
hepatitis C medicines sofosbuvir, ledipasvir and velpatasivir are even more stringent.5 Gilead
licensees can supply the medicines to excluded countries when there is no product patent and
no “reasonable possibility” for Gilead to pursue a patent.d However, patents are defined as both
granted patents and applications for the production of both the APIs and finished formulations
of the three medicines – including secondary patents. In an atypical extension of the definition
of patents, a method of use or method of manufacture patent is also considered a “product
patent” under this license. Additionally, a manufacturer could only determine that there were
“no patents” in eligible countries if there is no “reasonable possibility of obtaining such a product
patent within a reasonable period of time,” but this includes pending applications and additional
future patent applications or current or future legal actions (including appeals). Based on this
definition, licensees would have difficulty establishing that there is no “reasonable possibility”
that Gilead may obtain a patent in India (the manufacturing country) and an excluded country –
even if existing patents were opposed, invalidated or not expected to meet patentability
standards.6 Such clauses create a chilling effect on generic manufacturers that may want to enter
a territory outside the license where there are no granted patents.
In contrast, licenses such as the ViiV-MPP license for the HIV medicine dolutegravir contain a
term allowing sales in countries outside the “territory” if there is no infringement of a blocking
patent. This provides greater flexibility to manufacturers to supply medicines in countries outside
the territory.e As a result, countries like Argentina, Costa Rica, Ecuador, Iran, Mongolia and
Thailand, where no patents have been granted, can procure generic dolutegravir, even though
they are not explicitly covered under the listed territories of the license. 7
4. Geographic limitations
A key issue present in many voluntary licenses is that the benefits of these agreements are not
available to all populations equally due to geographic restrictions imposed on licensees. It is
d Article 10.3(c)(ii) of Gilead’s bilateral license on sofosbuvir, ledipasvir and velpatasvir. Available from:
https://www.gilead.com/-/media/files/pdfs/other/form-ar-hcv-license-agmt-gild-
11202017.pdf?la=en&hash=EA13A53F28CE66946255B7369B57EEFE
e Based on Article 2.4 of the ViiV-MPP licence agreement read together with the MPP’s Expert Advisory Group report, available
from: https://medicinespatentpool.org/uploads/2020/04/ViiV-DTG-EAG-Report.pdf
6October 2020
standard to include a clause in voluntary licenses describing the “territory” – a list of countries
and territories where licensees can produce and/or market the medicine in question. Over the
last 25 years patent-holding pharmaceutical corporations have slowly gained greater negotiation
power over where generics can and cannot be marketed. These negotiations can exclude millions
of people from access to more affordable medicines.
The determination of the list of countries/territories in a voluntary license is often justified based
on country income, driven by business interests of the patent-holding company, which may leave
out many countries with a high burden of disease where more affordable generic medicines are
desperately needed. This may even exclude countries where the medicine is manufactured.
Licensees may use additional leverage through technology transfer terms to further limit the
geographic scope of a license.
Flaws of reliance on GNI per capita for health objectives
Companies negotiating voluntary licenses often justify their territorial decisions to exclude
countries based on the fact that they are classified as middle- or high-income countries according
to the World Bank ranking of countries’ gross national income (GNI) per capita,f despite the
potential negative impact on access to medicines where they are needed most.
The World Bank classification scheme has not been significantly adjusted since 1989 other than
for inflation. Numerous countries have moved up the income classification from low- to middle-
income over time. Yet, research has demonstrated that GNI per capita was not a statistically
significant predictor of health disparities, after controlling for other factors.8 Countries classified
as middle income are home to 75% of the world’s population, 62% of the world’s poor 9 and face
a double burden of communicable and non-communicable disease.10
Health needs and resource gaps (such as health budgets, infrastructure, human resources, etc.)
should be a much more significant factor for determining country inclusion in voluntary licenses.
In early 2015, the heads of multilateral organizations engaged in global health launched the
Equitable Access Initiative (EAI) to consider alternatives to GNI as a framework to assess
countries’ need for external financial support for health.g The EAI similarly recommended that
greater consideration should be given to countries' health needs and domestic capacity.11,12
fThe World Bank classifies countries as low-income, lower-middle-income, upper-middle-income, and high-income. More info
available from: https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.
g The Equitable Access Initiative (EAI) was launched in early 2015 by the heads of multilateral organizations engaged in global
health: Gavi, the Global Fund, UNAIDS, UNDP, UNFPA, UNICEF, UNITAID, the World Bank and WHO.
7October 2020
Still, the World Bank, donor agencies such as the Global Fund for AIDS, Tuberculosis and Malaria,
Gavi, the Vaccine Alliance, and other global health initiatives continue to rely on income
classifications to define funding eligibility, resource allocation, and, in the case of pharmaceutical
companies, tiered pricing and geographic exclusion in voluntary licenses. As a result, a number
of countries that are categorised by the World Bank as upper-middle-income countries are left
out of most voluntary licenses despite their high disease burdens and challenges addressing
health needs.
For instance, Brazil and China have been excluded from all voluntary licenses covered in this
briefing analysis. Most recently, despite facing a global pandemic, Gilead excluded Brazil along
with most South American countries, China and Russia from a voluntary license secretly signed
with a few generic companies on remdesivir, a medicine first developed for Ebola and later
repurposed to treat COVID-19 (Annex 1). Under the WHO Solidarity Therapeutic Trial for COVID-
19, the final results demonstrate little to no effect of the medicine in reducing mortality.13
Nevertheless, Gilead’s business strategy has set a negative precedent by offering a voluntary
license that excludes nearly half of the world’s population during a global pandemic.
Other examples of licenses that have excluded several middle-income countries include: AbbVie’s
2019 MPP license agreement for glecaprevir/pibrentasvir;14 Gilead’s 2015 license on hepatitis C
medicines;15 Gilead’s 2011 MPP license for several HIV treatments; 16 AbbVie’s 2014 MPP license
agreement for lopinavir/ritonavir and ritonavir (see case study); and ViiV’s 2016 MPP license
agreement for dolutegravir.17,18
“Manufacturing only countries” and the prohibition of supplying home markets
Some voluntary licenses even exclude countries where affordable generic medicines are
manufactured, defining them as “manufacturing only countries.” Licensees based in these
countries can only produce and supply other countries listed under the license territories but are
prohibited from supplying their home country markets.
For example, under the 2018 AbbVie-MPP voluntary license for the hepatitis C treatment
glecaprevir/pibrentasvir, India is a manufacture-only country. India is home to a large hepatitis C
epidemic, yet this restriction leaves people in India and Indian public health programmes without
access to more affordable generic glecaprevir/pibrentasvir, even though these medicines are
being manufactured in country.19 The absence of a domestic market opportunity also stifles
interest from Indian generic companies that might have otherwise had interest in developing this
product.
8October 2020
Similar exclusions apply in other MPP licenses. Chinese generic manufacturers have signed
sublicense agreements with the MPP on Gilead’s tenofovir alafenamide, ViiV’s dolutegravir,
AbbVie’s lopinavir/ritonavir, and Bristol Myers Squibb’s atazanavir to export to other countries,h
but China itself is not included in the license territory, leaving people in China without access to
generic versions of these life-saving HIV medicines that are manufactured domestically.
This licensing practice raises ethical questions about harnessing the capacity of developing
countries to develop, produce and supply quality medicines, while at the same time prohibiting
generic companies from responding to considerable unmet medical needs domestically.20
Restrictive clauses concerning the use of know-how
In addition to patents, voluntary licenses may also have conditions related to sharing non-
patented, practical, secret information (“know-how”) regarding the manufacture of the API
and/or finished formulations. This know-how may reduce the time it takes licensed generic
manufacturers to develop a generic version. However, the know-how transfer conditions may
include additional restrictions of sales outside the license territory, even in countries where the
medicine is off patent (see, for example, atazanavir case study). In the short term, clauses related
to know-how may offer a faster route to a generic launch, but they may do so at the expense of
a licensee’s ability to supply countries outside the listed territories where patents do not apply.21
5. Differential treatment of age groups, formulations and medical indications
When voluntary licenses exclude or set up different terms and conditions for different versions
of the same medicine, people seeking treatment may lose out. This differential treatment has
been applied to different age groups, formulations and medical indications in various licenses.
Some licenses have applied different terms for formulations that can be prescribed to both adults
and children. This can impact people’s access to the most appropriate treatments (see, for
example, lopinavir/ritonavir case study). For example, a 50mg dose of dolutegravir may be
prescribed to children living with HIVi and adults. Yet under the patent-holder ViiV’s license with
the MPP, countries like Azerbaijan, Colombia, and Malaysia are included in a paediatric license,
but not an adult formulations license. This means adults in these countries are left without
affordable access to an important treatment. It also leaves procurers like MSF faced with
complexities in procurement. Generic suppliers can request that purchase orders explicitly
mention consumption by paediatric patients. However, MSF and procurement agencies often
maintain advance stock to support medical projects in a timely way and requesting such data is
not required from a medical standpoint and will lead to unnecessary delays.
h Refer to the licenses published by the MPP, available from: https://medicinespatentpool.org/progress-achievements/licences/
i Recommended for children in the ≥20kg weight band.
9October 2020
Other licenses have imposed restrictions based on indications. For example, TB Alliance (TBA) has
created bedaquiline-pretomanid-linezolid (BPaL) as the first all-oral, 6-month treatment regimen
for highly resistant forms of drug-resistant TB. The regimen has been approved by the US Food
and Drug Administration for extensively drug-resistant TB treatment and was subsequently
licensed by TBA to Mylan and may be licensed to other manufacturers.22 However,
pharmaceutical corporation Johnson & Johnson (J&J) holds the patents on the TB medicine
bedaquiline, and has only licensed bedaquiline to TBA for the use of the medicine to treat drug-
susceptible TB.j,23,24 So treatment providers who want to prescribe BPaL will have to source
bedaquiline from J&J separately and pretomanid and linezolid from Mylan or a third supplier,
making procurement of the regimen complex for TB programmes. Only bedaquiline is currently
covered by a patent.
6. Differential treatment of health care systems
Through voluntary licenses companies can apply different terms or exclusions for medicines
provided within different health care systems. For instance, under the ViiV-MPP license on
dolutegravir,25 12 countries are included as royalty-bearing countries, which are further
categorized into different tiers with differential rates of royalties.26 For these countries, the
license also differentiates the “public market,” including treatment programmes provided by
governments, UN agencies or non-governmental and humanitarian organisations, from the
“private market,” where people are likely to pay much higher prices and out-of-pocket.27
ViiV’s license allows generic companies to supply both public and private markets in the royalty-
free countries, but only the public market in the 12 royalty-bearing countries, with
distinguishable packaging stating the restricted supply destination. 28 While this approach may
have been presented as expanding the overall number of countries included in the license
territory, it also presents significant problems for people who need medicines by segmenting the
market.
In some countries, treatment programmes under the government that are defined as the “public
market” may delay updating treatment guidelines to include new medicines, even if they have
access to generic versions under a license. People who have developed drug resistance and need
urgent access to newer medicines have no choice but to seek treatment with these medicines in
the private health sector, where they will pay higher prices for the branded dolutegravir product
in the absence of less expensive generic options.29
jIn June 2009, the TB Alliance, a not-for-profit product development partnership negotiated a royalty-free license for the
worldwide development of, and access to, bedaquiline in the field of DS-TB with Janssen, a subsidiary of Johnson & Johnson.
Tibotec, an affiliate of Janssen, had developed bedaquiline for the treatment of drug-resistant TB and is solely responsible for
supply of bedaquiline for DR-TB.
10October 2020
7. Complexities of tiered royalties
Another issue with voluntary licenses is when they introduce complex systems of royalty
payments that burden treatment providers and people receiving treatment by driving up prices
and complicating procurement processes. For example, under ViiV’s license for adult
formulations of dolutegravir with the MPP, royalties ranging from 5-10% apply in countries where
there is a patent granted and in force. Under this license, sublicensed generic suppliers are
required to pay 5% in royalties in India, Philippines, Moldova and Vietnam; 7.5% in Egypt,
Indonesia, Morocco, Armenia and Ukraine; and 10% in Turkmenistan. In MSF’s experience,
generic manufacturers transfer the burden of paying higher royalties on to procurers and people
in need of treatment by adding the royalty rate to the prices of the end-product supplied. MSF
has also received requests to provide country of destination information to generic
manufacturers that supply dolutegravir and dolutegravir-based fixed-dosed combinations in
order to calculate royalties and final prices, which complicates the process of procurement.
Companies should implement a simple system of royalties in voluntary licenses for ease of
administration. Additionally, royalties should be applicable only in territories where there are
patents in force.
8. Restrictions on the source and production of API
Some voluntary licenses include restrictive terms on the source and production of active
pharmaceutical ingredients (APIs), which are an indispensable part of formulating the final
products of medicines and constitute a significant percentage of the total cost of production. The
ability to manufacture APIs under a more efficient process or procure from alternative sources
plays an important role in ensuring affordable prices for finished products. 30 Restricting the
sources of API blocks potential producers in other countries from producing and competing in
international markets.
Since 2006 Gilead has signed three voluntary licenses directly with Indian generic companies and
API manufacturers which include terms controlling API supply. This includes licenses for the HIV
medicine tenofovir (2006); direct-acting antivirals sofosbuvir, ledipasvir and velpatasvir to treat
hepatitis C (2015); and the COVID-19 medicine remdesivir (2020). Gilead signed a similar license
with the MPP on the HIV medicines tenofovir and other antiretrovirals (2011). Each of these
license agreements include clauses limiting licensee generic companies to only source and supply
API from/to each other or Gilead, prohibiting them from sourcing or supplying API with any other
companies outside of Gilead’s license.k,31 This caused concerns in countries that rely on API
kArticle 2.1(a) of Gilead’s voluntary license on hepatitis C medicines. Full license available from: https://www.gilead.com/-
/media/files/pdfs/other/form-ar-hcv-license-agmt-gild-11202017.pdf?la=en&hash=EA13A53F28CE66946255B7369B57EEFE
11October 2020
supply from the licensee generic companies, such as Brazil. Brazilian civil society challenged
Gilead’s patent application on tenofovir in India due to concerns that Gilead’s voluntary licenses
prohibited export of the medicine or API to certain middle-income countries, including Brazil,
even though no patent on the medicine had been granted.32
Some licenses do not allow licensees to manufacture APIs, such as the 2017 agreement signed
between company Otsuka and Mylan on the TB medicine delamanid. Currently, Mylan can only
produce and supply delamanid tablets using API from Otsuka at prices set by Otsuka. The result
is that Mylan’s generic versions of the medicine are not priced substantially lower than Otsuka
(see delamanid case study).
9. Anti-diversion requirements
Many voluntary licenses include “anti-diversion” clauses, which attempt to prevent generic
medicines produced under the license from being resold to individuals or countries outside of
the territory, in order to preserve lucrative high- or upper-middle-income markets for the patent-
holding company.
For example, ViiV’s license with the MPP for dolutegravir includes an anti-diversion clause
requiring “jurisdiction-specific packaging” for paediatric medicines supplied to countries which
are not within the scope of their separate adult formulation license. This entails having separate
packaging for paediatric versions of dolutegravir 50mg as a way for ViiV to enforce the territory
of the license and prevent adults in these countries from accessing the generic version of the
drug.
Gilead also included such an “anti-diversion” programme in its voluntary license with a number
of Indian generic companies for the hepatitis C medicine sofosbuvir in 2014.33 The extent of the
burden this clause placed on generic manufacturers, treatment providers and people in need of
medicine solely to protect Gilead’s commercial interests was unprecedented at the time and the
subject of a detailed analysis by MSF. 34,35 MSF’s analysis highlighted how the stringent
requirements under this clause burden treatment providers with dispensing restrictions that may
interfere with doctor-patient confidentiality (requiring personal contact information from
providers and patients, for example) and require people to be a citizen of the country where they
are accessing treatment (negatively impacting refugees and migrants).36
Including an anti-diversion clause in a voluntary license could eliminate the possibility of using
countries outside the defined territory using parallel importation – purchasing a medicine in one
country and transporting it into another. For instance, in Gilead licenses, there are burdensome
reporting requirements that attempt to deter parallel importation. In MSF’s experience,
12October 2020
procurers end up having to share importation documentation or permits as proof to generic
companies that in turn have to report to which countries they have sold the medicines. Gilead’s
requirements include strict monitoring of third-party distributors and resellers within licensee’s
distribution and supply chain, and Gilead’s right to approve third-party agreements and
termination rights.l Such clauses also require generic licensees to impose anti-diversion terms on
their own distributors.m
10. Restrictions on research and clinical studies
Some voluntary licenses contain terms to prohibit licensee generic companies from conducting
additional research or clinical studies with the licensed products without the consent of the
patent-holding company. This could include clauses that say generic companies “shall conduct
no studies or basic research or pre-clinical, clinical or other trials” with the licensed product
without the written consent from the licensor. n Restrictions on the scope and extent of
conducting research or clinical studies with the licensed product is concerning because it risks
undermining the statutory research and experimental use exception allowed by many national
laws,o and in compliance with the World Trade Organization (WTO) Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement).p
11. Grant-back terms
Voluntary licenses may also impede access to medicines and innovation when they include
“grant-back” clauses. These clauses are used by licensors to gain control over improved
manufacturing processes and formulations developed by other licensee manufacturers. They do
so by requiring licensees/sublicensees to agree to “grant-back” any rights to improvements in
process or formulation developed by the licensee/sublicensee that relate to the original patent. 37
lSee, for example, Article 2.4 (b) and Article 3.6 of the Gilead license on hepatitis C medicines. Available from:
https://www.gilead.com/-/media/files/pdfs/other/form-ar-hcv-license-agmt-gild-
11202017.pdf?la=en&hash=EA13A53F28CE66946255B7369B57EEFE
m See. For example, Article 2.4 (b) of the Gilead license on hepatitis C medicines. Available from: https://www.gilead.com/-
/media/files/pdfs/other/form-ar-hcv-license-agmt-gild-11202017.pdf?la=en&hash=EA13A53F28CE66946255B7369B57EEFE
n See, for example, License Agreement, By and Between Merck, Sharp & Dohme Corp and MSD Tuas Singapore PTE Ltd as the
Licensor and Emcure Pharmaceuticals Ltd., as the Licensee, of May 25, 2011, Section 5.1 Copy of this license on HIV medicine
raltegravir obtained on request.
o For example, Sec. 47(3) of the Indian Patent Act. According to an official response of India to WIPO questionnaire on
exceptions and limitations under patent law, there is no limitations on the scope and extent to the experimental use and
research of the patented product according to law. More details available from:
https://www.wipo.int/export/sites/www/scp/en/exceptions/submissions/india.pdf
p The WTO TRIPS Agreement is an international trade agreement which came into force between 1995 and 2005. It sets
minimum requirements for pharmaceutical intellectual property laws and enforcement among WTO members. Article 30 of
TRIPS agreement allows countries to adapt exceptions to the exclusive rights under patent protection. Research and
experimental use exception is one of the long standing common practices at national levels that is in compliance with Article 30
of TRIPS.
13October 2020
Under AbbVie’s 2018 license to the MPP for glecaprevir/pibrentasvir the grant-back terms in the
agreement may impose restrictions on marketing of new formulations developed by
sublicensees. The main license agreement contains a grant-back clause for sublicensees covering
new formulations developed after taking the current license agreement,q extending to sublicense
agreements signed between the MPP and sublicensee generic companies. Accordingly, if any new
glecaprevir/pibrentasvir formulation is developed by sublicensees, they will need to provide
AbbVie the option (and the right of first refusal) to obtain the sole right to purchase the new
glecaprevir/pibrentasvir formulation for sale in the US and EU, or a sole license to any patents
and know-how necessary to use the new glecaprevir/pibrentasvir formulations in the US and EU.r
The grant-back clause also requires sublicensees to offer AbbVie an option to a non-exclusive
and royalty-free license to commercialise the new glecaprevir/pibrentasvir formulation in all
countries outside the US and EU.s These grant-back obligations mean that AbbVie will benefit
from new glecaprevir/pibrentasvir formulations developed by sublicensees to supply territory
and non-territory countries. However, there is no reciprocal benefit that would allow a licensee
to supply non-territory markets should they develop a new formulation.
This grant-back clause requires further analysis to understand its potential impact on competition
among manufacturers that wish to develop new formulations of glecaprevir/pibrentasvir in the
future. Such clauses may create disincentives for generic producers to develop long-acting
formulations as their market access in high-burden countries is heavily restricted by the license.
Opportunities for government action
Regulating voluntary license practices
The issues with voluntary licenses discussed above raise the question of how practices of
negotiating license agreements between private entities can be regulated. Despite the fact that
a voluntary license is a commercial agreement, the effects of licensing terms may affect people’s
right to health and access to medicines and as such should require government oversight and
regulation. Fortunately, existing mechanisms under international and national laws offer some
options to closely monitor and regulate voluntary licenses. These include provisions in the
international TRIPS Agreement, national voluntary license registration and regulation laws, and
national competition laws.
q Article 3.9 of the Abbvie-MPP license for glecaprevir/pibrentasvir. Available from: https://medicinespatentpool.org/licence-
post/glecaprevir-pibrentasvir-g-p/
r Article 3.9(a) of the Abbvie-MPP license for glecaprevir/pibrentasvir. Available from: https://medicinespatentpool.org/licence-
post/glecaprevir-pibrentasvir-g-p/
s Article 3.9(b) of the Abbvie-MPP license for glecaprevir/pibrentasvir. Available from: https://medicinespatentpool.org/licence-
post/glecaprevir-pibrentasvir-g-p/
14October 2020
The TRIPS Agreement authorises countries to prevent abusive IP practices that “unreasonably
restrain” competition, trade or technology transfer.t,38 The two most often used approaches to
regulate voluntary licenses through national laws are the registration of licenses and the use of
competition laws to tackle abusive license terms.39
A number of countries have included a requirement for voluntary licenses to be registered or
approved by the competent public authorities. For instance, under Brazilian patent law, licenses
on patents need to be recorded by the Brazilian National Patent Institute (INPI) to be effective
and must be registered with the Central Bank of Brazil.40 In Thailand, patent licenses must be
registered with the Department of Intellectual Property.41 However, the requirements stop short
of publishing, and countries may in practice exercise no oversight of the terms of voluntary
licenses. Increasing transparency is extremely important to enable government scrutiny of
licenses and prevent anti-competitive practice that may negatively impact both local and global
markets (see, for example, India case study).
In addition, some voluntary license terms may constitute anti-competitive practices and be
subject to anti-competition inquiry. National laws and policies prohibiting anti-competitive
licensing practices may vary. For instance, Philippines’ rules and regulation on voluntary license
prohibit clauses with specific requirements for sourcing raw materials.42 The Indian Patent Act
outlaws coercive package licensingu and license terms that require exclusive grant-back or that
prevent patent challenges.43 The Draft Guideline for Anti-competitive Licensing of Intellectual
Property (2017) issued by the National Anti-Monopoly Bureau of China, also calls for scrutiny of
terms requiring exclusive grant-back licensing and preventing patent oppositions.44 For national
authorities formulating such laws and policies, the United Nations Development Programme
(UNDP) has published a list of typical abusive or anti-competitive provisions in voluntary licenses
as a reference.45
However, national laws and regulation on voluntary licenses are not consistently applied, as
evidenced by some of the challenges presented in the voluntary licenses in this analysis. Existing
regulations need to be enforced to be effective. Further, given that both IP laws and competition
laws set rules nationally, the effectiveness of using existing law and policy measures to regulate
voluntary license practices in a transnational context still require further studies and exploration.
tSee, for example, Articles 8 and 40 of the TRIPS Agreement. More details available from:
https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm
u Coercive package licensing is a practice whereby licensees are required to accept purchase a ‘package’ of patents and non-
patented goods, even if those patents and goods are not what the licensee needs.
15October 2020
Compulsory licensing
Countries may also find that patent-holding pharmaceutical corporations refuse to grant a license
on a medicine or only agree to offer an extremely restricted scope of a license.46,47 In these
circumstances, countries have options available to remedy the situation, including consideration
or use of compulsory licenses. Health or competition authorities that find their country excluded
from the territory coverage of voluntary licenses or identify other restrictions harmful to public
health in licenses should be empowered to invoke government use licenses (a form of
compulsory license), in accordance with the TRIPS Agreement and the Paris Convention for the
Protection of Industrial Property (see Malaysia case study).4
Particularly in contexts such as the drug-resistant tuberculosis (DR-TB) public health emergency
or the 2020 COVID-19 pandemic, the decision to enable manufacture and sale of more affordable
versions of urgently needed medicines must not be left to voluntary, “business as usual”
commercial practices. Supporting and encouraging countries to use all of the public health
safeguards available to them through the TRIPS Agreement, especially government use licenses,
can overcome the limitations of relying on voluntary licenses. The power of compulsory licenses
– both consideration of and use in practice – also provides an important leverage point and could
possibly compel patent-holding companies to improve their practices in voluntary licensing (see
Israel case study).
In response to the COVID-19 pandemic, a number of countries have amended or started changing
their patent laws, rules and regulations to facilitate easier and quicker processes for the grant of
compulsory licenses for government use. These countries have traditionally been excluded from
past voluntary licenses on HIV and hepatitis C medicines, including Australia,48 Brazil,49 Canada,50
Chile,51 Ecuador,52 Germany,53 and Hungary.54
Enabling patent oppositions
Patent oppositions, including those filed by civil society and patient groups, play an important
role in countries that have been excluded from the territory of a license and in key manufacturing
countries. In some cases, patent offices have rejected or revoked patents in response to patent
oppositions by civil society in middle-income countries excluded from voluntary licenses. These
decisions successfully prevent the establishment or extension of a patent monopoly and open up
local production and supply of the medicine.55,56 Rejection or revocation of a patent as a result
of patent oppositions could also lead to termination of the license or “unbundling” of non-
patented medicines by licensees from a broader license agreement giving them greater freedom
16October 2020
to operate and supply globally.v Patent oppositions can also offer licensees leverage to negotiate
more flexible terms, such as the expansion of territories covered under an existing voluntary
license.
Voluntary licensing case studies
The key issues with voluntary licenses are not new, and many examples from past and current
licenses demonstrate how in practice unregulated voluntary licenses can impede access to
medicines. Voluntary licenses on atazanavir, delamanid and lopinavir/ritonavir show how
multiple issues can occur in any given license. Similarly, responses from Brazil, India, Israel and
Malaysia illustrate both the roles that countries can play to promote access to medicines and/or
the opportunities for improvement in government response.
Medicines
Atazanavir
Atazanavir is a protease inhibitor used in combination with another treatment, ritonavir, as a
second-line treatment of HIV. Generics are available, including in a fixed dose of atazanavir
300mg/ritonavir 100mg for less than 20 USD per month. 57 However in some countries where the
medicine is patented by Bristol Myers Squibb (BMS), HIV programmes and people living with HIV
face barriers in accessing these affordable formulations. While the compound patents on this
medicine have expired in many countries, secondary and/or process patents remain in countries
not covered by voluntary licenses (for example, Brazil, China, Mexico and Russia).
In February 2006, BMS entered into an agreement for patents on atazanavir with generic
companies Aspen PharmaCare (South Africa) and Emcure Pharmaceuticals (India). 58 BMS
subsequently entered into an agreement with Matrix, an Indian subsidiary company of the US
generic company Mylan for the territories of sub-Saharan Africa and India. 59 In November 2011,
BMS also announced an agreement with the Brazilian Ministry of Health with limited geographic
scope, limited scope of the licensed IP and restrictive terms for technology transfer.60 In
December 2013, BMS granted the MPP a voluntary license that could be sublicensed to generic
manufacturers to supply atazanavir in 110 countries, which was further extended in 2017 to
include 12 additional countries: Algeria, Cook Islands, Egypt, Equatorial Guinea, Indonesia,
Malaysia, Morocco, Niue, Philippines, Tunisia, Ukraine and Vietnam. 61
vSee, for example, Guha S. Patent Office rejected tenofovir: celebrating opportunity for generic manufacturers? Spicy IP.
[Online]. 2009 Sept 5. [Cited 2020 Sept 28]. Available from: https://spicyip.com/2009/09/patent-office-rejected-tenofovir.html;
and I-MAK. Evaluating the potential impact of Aurobindo’s unbundling of the Medicines Patent Pool (MPP)-Gilead Sciences
(Gilead) license on tenofovir: a need for increased transparency. [Online]. 2011 Dec [Cited 2020 Sept 28]. Available from:
http://www.i-mak.org/wp-content/uploads/2017/10/2012FINALAUROBINDOIMPACTANALYSIS.pdf
17October 2020
These licenses demonstrate at least three abusive license practices: lack of transparency, limited
geographic coverage and restrictive terms for accessing know-how.
Lack of transparency: Through multiple deals across more than a decade, most of which were not
public, BMS created a thicket of licenses. The result was a lack of transparency that made it
difficult to understand where generic formulations of atazanavir could be supplied under the
terms of these licenses.
Geographic limitations: The BMS-Matrix license agreement on atazanavir restricted geographic
coverage, even in countries where no blocking patents were granted. For example, when Mylan’s
Indian subsidiary won PAHO’s tender for procurement of atazanavir for Venezuela in 2012 and
2014, BMS sued Mylan in the US and subsequently in Indian courts to prevent export to
Venezuela. Venezuela was not included in the list of licensed territories of the Matrix/BMS
license, but there were also no granted product patents on the compound, pro-drug or salt form
in India or Venezuela.62 Mylan was only able to export a consignment of medicine (100,000
bottles) in the last quarter of 2014, after the injunction sought by BMS was rejected by Indian
courts.63
Restrictive terms for accessing know-how: The 2013 BMS-MPP license on atazanavir lists 110
countries in its territory. When the license was signed, there were another 34 countries where
BMS had no granted patents. In principle, BMS should not have been able to prevent generic
competition where it didn’t have any patent rights. This was reflected in paragraph 2.7(C) of the
licensing agreement, which entitled generic companies export atazanavir to these additional 34
countries.64 However, if sublicensees relied on the manufacturing know-how offered by BMS,
then according to the licensing agreement, supply outside of the territory constituted breach of
the agreement – even in the absence of any granted patent rights.
Delamanid
Delamanid – a medicine recommended by WHO to treat drug-resistant tuberculosis – was
launched at a price of US$ 1,700 for a six-month regimen, making it one of the most expensive
oral TB medicines. Many people need the medicine for up to 20 months, further escalating
costs.65 Delamanid’s high price contributes significantly to MSF’s expenses for treating people
with extensively-drug-resistant TB (XDR-TB). Japanese company Otsuka holds the primary
patents of delamanid in a number of countries, including in many high-burden countries.w
w The primary patent on delamanid (WO2004033463) has been granted in China, India, Russia, and South Africa and is pending
Brazil, all of which are TB high-burden countries. More details available from:
https://www.medspal.org/?product_standardized_name%5B%5D=Delamanid+50+mg&page=1
18October 2020
Instead of licensing the patents on the medicine non-exclusively and transparently, Otsuka signed
secretive deals in 2017. Otsuka signed an initial license agreement with generic pharmaceutical
company R-Pharm to supply delamanid in Eastern Europe and Central Asian countries.66 They
signed a second license with the US pharmaceutical company Mylan for distribution in India,
South Africa and where Otsuka has no commercial presence.67 Despite the existence of these
licenses, prices of delamanid have not fallen significantly as they should with the availability of a
generic source.68
The delamanid licenses demonstrate at least three abusive licensing practices: lack of
transparency, restrictions on the source and production of API, and geographic limitations.
Lack of transparency: Terms and conditions of these licenses are unknown, making it difficult to
determine whether the agreements are aligned with public health needs or are merely a strategy
to keep Otsuka’s control of the market. The TB community has requested that Otsuka and the
licensees make the license public, but the companies have not responded.
Restrictions on the source and production of API: According to Mylan, it can produce delamanid
but must use API sourced from Otsuka. Mylan can only begin using its own API to produce
delamanid in late 2021 – a year before the patent expires and the expected entry of other
producers. As API represents a significant portion of the final price of a medicine,69 by not
allowing Mylan to independently manufacture or source APIs independently, the agreement
inhibits the generic manufacturer from offering finished delamanid formulations at lower prices.
Geographic limitations: Otsuka’s voluntary license with Mylan does not cover all "high-burden
countries" (HBC) affected by TB, TB and HIV coinfection, and multidrug-resistant TB. As a result,
these HBCs cannot benefit from the lower prices that may be achieved when Mylan begins
producing finished formulations with its own API in 2022.
Lopinavir/ritonavir
The HIV medicine lopinavir/ritonavir, recommended as a first-line treatment for all HIV-positive
infants and children as well as part of second-line treatment for adults, is one of the most widely
patented medicines globally with exclusivity potentially running until 2024. x For years the patent
xA patent application on a heat-stable formulation of LPV/r has been granted in a few low- and middle-income countries. More
details of the patent status of LPV/r in low- and middle-income countries can be found at MedsPal database. Available from:
https://www.medspal.org/?product_standardized_name%5B%5D=Lopinavir%2FRitonavir+100%2F25+mg&page=1
19October 2020
holder AbbVie (formerly Abbott) has enforced its monopoly and charged very high prices in
several middle-income countries, such as Brazil and Malaysia.70
AbbVie signed a voluntary license agreement with the MPP in 2014 for some paediatric low-
strength formulations of the treatment of HIV in young children in 102 countries. In 2015, with
major stockouts of adult lopinavir/ritonavir in South Africa, AbbVie issued a voluntary license for
the adult formulation of lopinavir/ritonavir and ritonavir with the MPP but limited this license to
54 African countries. All countries outside of Africa remained excluded from access to generic
adult formulations of lopinavir/ritonavir and ritonavir where patents were in force.71
These licenses demonstrate at least two abusive licensing practices: geographic restrictions and
differential treatment of age groups.
Geographic restrictions: The 2014 paediatric agreement was limited to 102 countries, excluding
a number of middle-income countries, such as Argentina, Brazil, China and Ukraine. 72 When
AbbVie finally agreed to sign a voluntary license with the MPP for adult formulations in 2015, it
prohibited supply for people in all countries outside of Africa where its patents were in force,
including Israel (see Israel case study).73
Differential treatment of age groups: The agreement initially excluded adult formulations and
was limited to only some paediatric formulations. AbbVie only licensed the liquid formulation of
lopinavir/ritonavir and the specific 40mg/10mg oral formulation of lopinavir/ritonavir that is
used for children under three years old to the MPP.74 The license left out the 100mg/25mg
paediatric tablet formulation used for children older than three years because they were
concerned that adults could be treated with a double dose of the paediatric tablet. To maintain
its monopoly over the adult formulation market, AbbVie’s voluntary license with the MPP left a
significant gap for children over 3 years old as well as adults in need of suitable generic
formulations of lopinavir/ritonavir in the countries not covered by the territory.75 The
discrepancy between the coverage for adults and children in this license shows a clear conflict
between what is needed to increase access to optimised treatment regimens and the commercial
interests of pharmaceutical corporations.
Country responses
Brazil’s voluntary licenses under the framework of national industrial policies
Some countries may adopt industrial policies aimed at strengthening national production
capacity for health technologies including for medicines and vaccines, attracting investments and
building know-how. For example, Brazil has adopted an industrial policy based on product
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